Disadvantages Of GDP

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GDP means basically means the value of the services and goods a country produces during a specific time period. It also stands for gross domestic product. A countries GDP cannot be too low to too high. This is because if the country GDP is too high, the country will have any space left to grow in the future. This will make it difficult for the countries economy. This also means that the government of the country will be able to control the taxes a lot easier. However, if the countries GDP is too low, it means that the economy is not growing fast enough, it is not growing in a fast rate. The demand for products will be lower and the taxes will be higher. There is a formula for GDP, the formula is C+G+I+NX. The C represents the consumption of…show more content…
For a company like Price Rite Mart, operating there would be a disadvantage compared to Hong Kong. This is because the business will have less income due to the the larger tax they would have to pay. They will not be able to make as much profit compared to Hong Kong. However, there is an advantage. The advantage is that they will be able to hire workers easier due to the high unemployment. By being able to hire more workers, the chances of hiring a productive loyal worker will be increased. This means the company will be able to produce and serve better services and higher quality products to the customers. This also means that the costs for land for their company will also be cheaper compared to Hong Kong. The cost of hiring the workers would also be cheaper compared to Hong…show more content…
It it used to increase the inflation rate so that it compensates the high economical growth. This is mainly used by the governments when they need to take control over the economy. Since the interest rates are low in Hong Kong because of the stable GDP, Price Rite Mart will be able to borrow more money from banks if they need to because they are able to payback less money to the backs after the loans. This will help enable them to make more profit with the borrowed cash. The interest rates in New South Wales, Australia is lower then Hong Kong. This is because their GDP is lower compared to Hong Kong. To prevent their GDP to go even lower, they will not increase the inflation rate since it would effect the demands of the services and goods thus causing their GDP to go lower. The exchange rate from Hong Kong to Australia is 1 HKD is equal to 6 dollar AUD. Price Rite Mart is a company that is based from Australia. The AUD has gotten weaker compared to before because it was once 1 HKD is equal to 8 AUD. As you can see that is a huge difference. This is a benefit for Hong Kong because when they buy products from Australia, they will be able to buy the goods

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